Economy

USAF Picks Boeing To Build Tankers; $35 Billion Contract

Boeing's NewGen Tanker, seen here in a rendering provided by the company, was chosen over a competing plane from EADS (European Aeronautic Defense and Space Company), winning a $35 billion Pentagon contract. i i

hide captionBoeing's NewGen Tanker, seen here in a rendering provided by the company, was chosen over a competing plane from EADS (European Aeronautic Defense and Space Company), winning a $35 billion Pentagon contract.

Boeing/AP
Boeing's NewGen Tanker, seen here in a rendering provided by the company, was chosen over a competing plane from EADS (European Aeronautic Defense and Space Company), winning a $35 billion Pentagon contract.

Boeing's NewGen Tanker, seen here in a rendering provided by the company, was chosen over a competing plane from EADS (European Aeronautic Defense and Space Company), winning a $35 billion Pentagon contract.

Boeing/AP

The Associated Press reports that the U.S. Air Force has awarded a highly contested $35 billion contract to build a new fleet of military air tankers to Boeing Co.

Boeing, based in Chicago, won the contract over archrival EADS of Europe; the two companies had staged a fierce competition to build nearly 200 airborne refueling tankers to replace the military's aging fleet of KC-135 planes.

The Air Force decision also comes as a blow to Alabama, where EADS had pledged to build its planes "at a long-shuttered military base in Mobile,"according to the AP.

Update at 5:30 pm ET:

Air Force Michael Donley says that Boeing and EADS conducted a "spirited competition" to build the new plane, called the KC-X tanker.

As Jack Speer reports in a Newscast spot, Boeing has previously said it will build the next generation tankers in Washington state and Kansas. Had it been awarded the contract, EADS had planned to build the planes in Alabama.

The victory for Boeing comes nearly three years after EADS initially won the contract in 2008, when it submitted a bid in partnership with Northrop Grumman. But Boeing won a protest that voided that competition, and a new bidding process began — this time, with EADS making its bid on its own, via a U.S. subsidiary.

The new competition was evidently very close. In awarding the contract, Pentagon officials said that both Boeing and EADS had met all minimum requirements for the new tanker.

It's not yet clear if EADS will seek to protest the most recent awarding of the contract.

The announcement was made Thursday afternoon by Secretary of the Air Force Michael Donley and Deputy Secretary of Defense William Lynn, along with Air Force Chief of Staff General Norton Schwartz and Under Secretary of Defense for Acquisition Technology and Logistics Ashton Carter.

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